The import of petrochemical products has experienced a downtrend over the last two years and over 30 projects have been planned to maintain the downtrend in coming years, managing director of the National Petrochemical Company said.
“Petrochemicals worth $2 billion were imported in 2020, which decreased to $1.5 billion in 2021 and NPC’s imports are projected to be around $1 billion in 2022,” Mehr News Agency also quoted Morteza Shah-Mirzaei as saying.
With the help of 33 development projects, NPC’s import will reduce by 70%, he added.
The official noted that with the implementation of these projects, NPC seeks to diversify the range of petrochemical products and help complete the value chain in petrochemical industry.
The official noted that development projects, which need an investment of $3.3 billion, will use the remaining feedstock to produce about 20 new commodities, including acrylic acid and propylene oxide.
Currently, 50 projects are underway across the country to increase petrochemical output and help develop the downstream sector.
The annual production capacity of Iran's petrochemical industry will soon reach 100 million tons per year from the current 90 million tons per annum and plans are underway to boost the same to 135 million tons in six years.
The petrochemical industry has played a key role in Iran’s economic growth, as it creates value-added and reduces the sale of oil and gas on which the economy has been dependent for decades.
With abundant hydrocarbon reserves and new private sector investments, Iran is working hard to maintain its global status in the key sector and broaden its scope.
According to the NPC chief, Iran’s revenues from the petrochemical industry will grow by 230% in the next six years.
Annual Revenues
Annual revenues from the petrochemical industry will reach $50 billion by 2027.
Last year, Iran exported around $15 billion of petrochemicals, he added.
Iran did not attract significant foreign investments in this period and had to rely on its own resources, because of international and US sanctions.
According to NPC, 67 petrochemical plants across the country received 40 million tons of feedstock, including condensates, ethane, natural gas and naphtha, in the last fiscal year, which was equivalent to 1 million barrels of crude per day. The figure is expected to surpass 2 million barrels per day in six years.
With the inauguration of new complexes, the number of petrochemical plants will reach 77, up 15% compared to the present.
Almost 60% of the petrochemical projects are in Asalouyeh and Mahshahr in southern and southwestern Iran, and the rest are scattered nationwide.
Among the sectors affiliated to the oil industry, the petrochemical sector is the most important one, as it produces the most added value.
Besides boosting production, Iran is striving to indigenize equipment and parts used in the key industry.
After the US imposed new sanctions in May 2018, the sector started facing problems regarding the production of certain petrochemicals. However, companies started collaborations with domestic engineers and knowledge-based firms to indigenize parts and equipment.
Last February, 70 contracts worth $300 million were signed with knowledge-based companies to accelerate the indigenization process.
High Gas Prices
The official defended the high price of natural gas delivered to petrochemical companies as feedstock and noted that each cubic meter of gas is sold at 20 cents, whereas based on international distribution hubs, including the Henry Hub Natural Gas Spot, the real price is 32 cents.
Despite the NPC official’s claims, managing directors of petrochemical plants, including Ebrahim Asgarian, the head of the board of directors at Kaveh Methanol Complex in the Persian Gulf port city of Bandar Dayyer, Bushehr Province, believe that plants’ operations have no economic justification any longer, as the National Iranian Oil Company has started to sell each cubic meters of gas at 20 cents, while the same amount of feedstock is sold at 15 cents in Europe.
The production of each ton of methanol costs the firm $430, yet it can be sold at a maximum price of $310 in foreign markets.
Asgarian said the company is incurring losses of $120 per ton, because of which it will halt operations until further notice.
Kaveh Methanol Complex, which became operational in 2020, increased Iran’s annual methanol production by 2.3 million tons to reach 14 million tons.
